Ex-aides will get $3.3M from Paxton
AG, whistleblowers who alleged retaliation settle suit
Four former aides to Texas Attorney General Ken Paxton have settled a suit against his office in which they claimed they had been fired in retaliation for reporting him to authorities for alleged corruption crimes.
According to the settlement agreement obtained by Hearst Newspapers, Paxton will pay $3.3 million total to the whistleblowers. He will also remove a news release from his website that had been critical of the employees, and he will state in the agreement that he “accepts that plaintiffs acted in a manner that they thought was right and apologizes for referring to them as ‘rogue employees.’ ”
Paxton, a Republican who was re-elected in November, said Friday that the settlement “put this issue to rest.”
“I have chosen this path to save taxpayer dollars and ensure my third term as attorney general is unburdened by unnecessary distractions,” he said. “This settlement achieves these goals. I look forward to serving the people of Texas for the next four years free from this unfortunate sideshow.”
The settlement will likely be paid for using taxpayer dollars, as has Paxton’s defense thus far. As of last spring, taxpayers had paid about $200,000 of Paxton’s legal fees. Hearst Newspapers has asked the office for an updated figure.
The agreement states that it is contingent upon all necessary approvals. The Legislature will need to agree to appropriate the funds. At least one Republican lawmaker has raised concerns.
“I am extremely troubled and concerned that hardworking taxpayers might be on the hook for this settlement between the attorney general and former employees of his office,” Rep. Jeff Leach, R-plano, told the Texas Tribune. “I’ve spoken with the attorney general directly this morning and communicated in no uncertain terms that, on behalf of our constituents, legislators will have questions and legislators will expect answers.”
In the suit, filed in late 2020,
the whistleblowers sought damages after they were fired by Paxton, whom they had accused of abusing the power of his office to help Nate Paul, an Austinbased real estate investor who donated $25,000 to Paxton in 2018. The FBI is reportedly investigating those claims, though no charges have been filed.
The case had made its way to the 3rd Court of Appeals, which in October 2021 ruled that the state’s whistleblower law should have prevented the employees from being fired.
The decision dealt a heavy blow to Paxton, who had argued that he was not subject to the Texas Whistleblower Act because he’s not a public employee but rather an elected official. As part of the settlement agreement, Paxton may not ask that the opinion be withdrawn.
T.J. Turner, attorney for David Maxwell, one of the whistleblowers, said in a statement: “The whistleblowers sacrificed their jobs and have spent more than two years fighting for what is right. We believe the terms of the settlement speak for themselves.”
In the suit, the whistleblowers accused Paxton of leveraging the power of his office to benefit Paul in a number of ways. First, they alleged that he pressured employees to issue an opinion allowing disclosure of records that Paul had requested, despite “longstanding OAG precedent and sound principles” to the contrary.
They also complained that Paxton pushed the office to intervene in civil litigation to pressure a charity to settle a dispute with Paul, against the advice of his own staff, including some of the whistleblowers, and that he demanded a fast-tracked legal opinion that stopped foreclosures during the pandemic, which saved Paul from foreclosure sales on several properties.
The weightiest accusation related to Paul’s criminal complaint against federal law enforcement. Paul, whose home and business were raided by the FBI in 2019, believed that law enforcement officials had made “substantive alterations to a warrant for the search of his property after it had been signed by the federal magistrate,” and he wanted the attorney general’s office to investigate, according to the suit.
When the whistleblowers found no evidence to support charges and refused to investigate or approve of Paxton seeking outside counsel to do so, Paxton gave a young Houston lawyer permission to start work even before he was officially contracted, the suit alleges.
Paul’s suit against a Texas State Securities Board investigator, various FBI special agents and other law enforcement officials was dismissed by a federal judge last November, about a year after it was filed.
Whistleblowers alleged in their suit that Paul had returned Paxton’s favors by hiring a woman with whom Paxton had an extramarital affair and by providing assistance to Paxton, either personally or through his construction company, in renovating his $1 million home in Austin’s Tarrytown neighborhood.
“Some of Paxton’s actions directing the OAG to benefit Paul were criminal without regard to motive,” the suit stated. “Others were so egregious and so contrary to appropriate use of his office that they could only have been prompted by illicit motives such as a desire to repay debts, pay hush money or reciprocate favors extended by Paul.”
In an unrelated criminal case against him, Paxton remains under indictment on felony securities fraud charges, which have yet to go to trial after more than seven years of delays. He has denied all wrongdoing.